The Global Financial Crisis and M&A

Kathleen Grave, Demos Vardiabasis, Burhan Yavas

Abstract

The global financial crisis is changing the landscape for mergers and acquisitions (M&A) and identifying newM&A targets that indicate a shift with significant impact to our global business practices. Even more now thanever before, companies are implementing strategies that include gaining access to new geographies. They areresponding to the crisis by focusing on growth outside their home country regions, expanding their geographicdiversification and investment in secondary markets. Previous M&A activity was focused in the triad of US,Europe and Japan, the world’s largest consumer markets. However, as the triad’s share of the global consumermarket declines companies are looking to new consumer markets that are expanding and open for opportunity.Our research examines the increased complexity and challenges that cross-border acquisitions need to address intheir effort to succeed globally in an environment of instability fueled by ongoing financial turmoil. Newdevelopment in formulating innovative deal structures and defining creative terms is apparent. Looking deeperinto the supply chain to identify acquisition targets is becoming attractive particularly in cross-border M&A todiversify risk, and maximize control, efficiencies and productivity. Increasing the influence of shareholders,maximizing legal arrangements and giving consideration to international political implications are all findingtheir way into the acquirer’s deal structure. M&A advancement in growth markets augments global businessinnovation and vitality in challenging economic conditions. Cross-border M&A is contributing to the change intoour macro global political, social and economic integration.

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